Zupnick v. Fogel
| Decision Date | 22 March 1993 |
| Docket Number | 688,D,Nos. 680,s. 680 |
| Citation | 989 F.2d 93 |
| Parties | Alex ZUPNICK; Herbert H. Levess; Allen Kopelson, individually and on behalf of all others similarly situated, Plaintiffs-Appellees, v. Mark H. FOGEL; JEM Management Associates Corp.; Frederick M. Mintz; Judith Reaume and Mintz & Fraade, P.C., Defendants-Appellants, Thompson Parking Partners, Limited Partnership III; Jack Fogel, B.S.D. Parking Consultants, Inc. and Martin Prew, Defendants, Stanley Muss, Defendant-Appellee, Alex Zupnick; Herbert H. Levess and Allen Kopelson, Counter-Defendants, Stanley Muss, Cross-Defendant. Judith Reaume; Frederick M. Mintz; JEM Management Associates Corp. and Mark H. Fogel, Counter-Claimants, Mark H. Fogel; JEM Management Associates Corp.; Frederick M. Mintz and Judith Reaume, Cross-Claimants. SPERBER ADAMS ASSOCIATES; Melvin R. Platt; Joan Kahn; Robert W. Brooks; Anthony Widman, as Trustee, Anthony Widman Pension Plan; Joseph Radositi; Harold L. Hitchins, Jr.; Dorothy W. Boswell; James W. Zulliger, Jr.; Stanley H. Stolar; Mark J. Kushner; Joseph Greenberg; Barbara Greenberg; Russell C. Jordan; James J. Jeffreys; Frederick D. Sewell; Robert P. Gormly, Sr.; Anthony Arangio; Rajiv Saxena; Lee B. Trevino; Albert Roeper; Charles W. Fletcher; Vernon Potter, as Trustee for Dallas Wholesale Employees Trust; Robert Israeloff; Rajkumar Mariwalla; Rose Aronin; S. Mohandoss; Kala Mohandoss; William Glazer; Max Cohen; Max Buchwald; Rosemary Buchwald; Philip J. Smith; Mary Page Young; Suri Ponamgi; Harold Levine; John G. Scranton; Louis Rubinstein; Rachel Rubinstein; Arven Aronin; Gabe Leventhal; Lewis B. Lane; David S. Kidder; Michael S. Ley, for Henry C. Kunkel; Vincent D. Caracio; William M. Yamanaka; Rose E. Wolf; Ronald J. Ross, Jr. and Donald T. Cohen, Plaintiffs-Appellees, v. JEM MANAGEMENT ASSOCIATES CORP.; JEM Parking Management Corp.; Mark H. Fogel; Judith Reaume; Frederick M. Mintz; Jack Fogel; Stanley Muss, B.S.D. Parking Consultants, Inc., Cross-Defendants. Goldstein, Golub, Kessler & Company, P.C.; JEM Management Associates Corp.; |
| Court | U.S. Court of Appeals — Second Circuit |
Ronald Cohen, New York City, for appellants.
Robert Zicklin, New York City (Elliot L. Evans, Laventhall & Zicklin, of counsel), for appellees Alex Zupnick, Herbert H. Levess and Allen Kopelson.
Robert I. Bodian, New York City (Erica Lehrer, Bodian & Eames, of counsel), for appellees Sperber Adams Associates, et al.
Before MESKILL, Chief Judge, MAHONEY and WALKER, Circuit Judges.
These two related appeals involve the partial settlement of two actions brought on behalf of investors in limited partnerships that were formed to acquire leaseholds in, and operate, two parking garages in New York City. Some of the nonsettling defendants in Alex Zupnick v. Mark H. Fogel, 89 Civ. 6607 (S.D.N.Y. filed Oct. 5, 1989) (Zupnick ), appeal a final order of the United States District Court for the Southern District of New York, Martin, J., entered on July 9, 1992. Some of the nonsettling defendants in Sperber Adams Assocs. v. JEM Management Assocs. Corp., 90 Civ. 7405 (S.D.N.Y. filed Nov. 19, 1990) (Sperber Adams ), appeal a final order of the same court entered on the same day. 1 These two orders approved the settlement of the respective plaintiff class' claims against Stanley Muss, a defendant in both actions. The district court found the proposed settlements to be "in all respects fair, just, reasonable, adequate and in the best interests of the Class, and each of the members of the Class." We address both appeals together because of their factual similarity and because the settlement agreements at issue are interdependent.
The appellants in both cases (the nonsettling defendants) argue that the district court erred in certifying the orders at issue as final judgments under Fed.R.Civ.P. 54(b). Making an unusual argument for appellants, they urge us to conclude that, as a result of this improper certification of the orders as final, we lack appellate jurisdiction to hear these appeals. The nonsettling defendants seek such a holding because it would destroy both the Zupnick and the Sperber Adams settlements which are contingent on the finality of these orders. They also contend that the district court erred in approving these settlements and in failing to set forth adequately the basis for its approval. The nonsettling defendants in Sperber Adams additionally argue that the settlement violates their Fifth Amendment rights because it disposes of their property interest in the 79th Street Garage without according them the opportunity to assert their claims.
The plaintiff-appellee class in Zupnick contends that the nonsettling defendants have no standing to appeal the order approving the proposed partial settlement in that case because the order does not affect their rights. Because we hold that the nonsettling defendants do not have standing to appeal either of these orders, we dismiss the appeals.
These appeals arise out of the acquisition by a number of investors of interests in two limited partnerships. Thompson Parking Partners, Limited Partnership III (Thompson Limited Partnership) was formed in June 1988 to acquire a leasehold interest in, and to operate, an existing parking garage in Manhattan's Greenwich Village (Thompson Street Garage). JEM Parking Partners, Limited Partnership IV (79th Street Limited Partnership) was formed in September 1988 to acquire a leasehold interest in, and to operate, an existing parking garage in Manhattan's Upper East Side (79th Street Garage). Appellant Mark Fogel and others formed corporate appellant JEM Management Associates Corp. (JEM Management) to syndicate the Thompson Limited Partnership and corporate appellant JEM Parking Management Corp. (JEM Parking) to syndicate the 79th Street Limited Partnership. JEM Management and JEM Parking are the managing general partners of the respective partnerships. Fogel is the majority stockholder, president and a director of both JEM Management and JEM Parking. He is also the administrative general partner of both limited partnerships. Appellants Judith Reaume and Frederick Mintz are shareholders, directors and, in the case of Reaume, an officer of both JEM Management and JEM Parking. Appellant Mintz & Fraade, P.C. represented the Thompson Limited Partnership in connection with the acquisition of the leasehold interest in the Thompson Street Garage and, according to the amended complaint in Zupnick, participated in the preparation and distribution of the offering materials for the Thompson Limited Partnership.
The plaintiffs-appellees claim they were induced to invest in the partnerships based on false and misleading information contained in private placement memoranda and investment summaries (the offering materials) allegedly prepared or disseminated by JEM Management, JEM Parking, Mark Fogel, Reaume, Mintz and others. The Zupnick action was filed on October 5, 1989 on behalf of all purchasers of limited partnership units in the Thompson Limited Partnership who had sustained damages. The district court subsequently certified it as a class action. Zupnick v. Thompson Parking Partners, No. 89 CIV 6607, 1990 WL 113197, at * 6 (S.D.N.Y. Aug. 1, 1990). The amended complaint alleged, inter alia, that the offering materials failed to disclose that, of the $2.25 million purportedly paid to purchase the leasehold interest, $850,000 was to be diverted to, or for the benefit of, the defendants. The amended complaint also alleged that the offering materials failed to disclose that the leasehold interest purchased by the Thompson Limited Partnership was commercially worthless. The Zupnick plaintiffs asserted claims of violations of federal securities law, the Racketeer Influenced and Corrupt Organizations Act (RICO) and state common law.
On November 19, 1990, the Sperber Adams action was filed on behalf of all investors who sustained damages as a result of their purchase of limited partnership units in the Thompson or the 79th Street Limited Partnerships. The Sperber Adams plaintiffs alleged wrongdoing in connection with the promotion and sale of the limited partnership shares. 2 The amended complaint in this case claimed, inter alia, that the offering materials failed to disclose that the leasehold interest in the 79th Street Garage was commercially worthless and that, out of the $1.65 million purportedly paid to purchase it, defendant Stanley Muss, owner of the fee interest in the garage, received only approximately $900,000. The Sperber Adams plaintiffs alleged similar causes of action as those asserted in Zupnick. In addition to damages, they also sought the appointment of a receiver for both partnerships. In April 1991 the district court complied with this request and appointed Joseph Aronauer, Esq. as Receiver for both the 79th Street and the Thompson Limited Partnerships. The court stated that it found it necessary to do so for the protection of the rights of the limited partners and the creditors of the two limited partnerships.
Almost immediately after the Receiver was appointed, counsel for the appellees and the Receiver learned that the partnerships were several months in arrears on the rent and other payments for both garages and that eviction actions were pending in New York state court brought by the landlords of both garages. The nonsettling defendants offered no defense to these proceedings. In fact, appellant Mark Fogel stated in open court that the partnerships...
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